Amidst Political Uncertainty, the shift to Value Continues: PwC Health Research Institute’s Top Health Industry Trends for 2017

New policies, emerging technologies and industry drug pricing will contribute to
increased innovation and collaboration in the New Health Economy

New York, Thursday, December 15, 2016 - According to PwC’s Health Research Institute (HRI), 2017 will be a year dominated by the continued shift toward value within healthcare as the industry adapts to a new era under the administration of President-elect Donald J. Trump. Traditional health organizations and new entrants will need to balance the uncertainty of the new administration’s approach to healthcare with the continued opportunities being created by forces greater than politics.

In its annual report, “Top Health Industry Issues of 2017,” released today, PwC’s HRI highlights the top 10 forces that are expected to have the most impact on the industry in the coming year. Leveraging results from a survey of 1,750 US consumers and interviews with health industry leaders, the report outlines three main strategies key healthcare players are expected to use to address the shift to value:

  • Adapt for value: The shift to a value-based world is forcing many organizations to adapt, and is prompting a wave of fine-tuning across the industry. Although details of President-elect Trump’s plans to repeal and replace the Affordable Care Act (ACA) remain scarce, some health organizations are already developing models in preparation for policy changes. Pharmaceutical companies will look to better engage with patients as Trump indicates a move toward a patient-centered healthcare system that promotes choice, quality and affordability. Additionally, the training wheels will ease off of value-based payments, as MACRA’s first performance year kicks off in 2017 and the Centers for Medicare and Medicaid Services offer more bundled payment programs. And, Health systems will need to modernize payment systems to be low-risk, low-complexity and secure in order to deliver more consumer-centered experiences.
  • Innovate for value: Health organizations, new and traditional, are addressing the shift toward value through invention and innovation. In 2017, the healthcare industry will need to prepare for emerging technologies – such as artificial intelligence, virtual reality and 3D printing – and their impact on business models, operations, workforce needs and cybersecurity risks. The battle against infectious diseases will also contribute to collaboration among public health agencies and private industry across the US and Europe. In addition, growing awareness of diet as a key driver of US healthcare costs may fuel the creation of inventive programs across the industry.
  • Build for value: Health organizations are building new solutions to address issues raised by the shift to a value-based ecosystem. Due to sustained market pressures, industry trade organizations and pharmaceutical executives may set new pricing restrictions in 2017. Healthcare M&A will likely continue in 2017, but the industry may also witness an uptick in alternative transactions as organizations aim to build new capabilities quickly in order to stay competitive. As the healthcare landscape continues to evolve, innovative programs are preparing medical students for work in a value-based world.

“Today we have a health system that is more connected, transparent and patient-centric than ever before.  Over the course of the past decade, the healthcare industry has witnessed significant improvements, but also consistent challenges in the New Health Economy,” said Kelly Barnes, PwC US Health Industries leader. “There is still work to be done to improve the consumer experience and affordability even as a new presidential administration starts to make their mark on the health system. Our prescription for the industry--double down on more innovation, new collaborations and the shift to value-based care."


Additional details on the top 10 business issues that HRI identified include:

Issue #1: Under a new administration, the fate of the ACA remains unclear

  • As one of his top priorities, President-elect Trump aims to repeal the ACA and replace it with a mix of tax credits, health savings accounts, high-risk pools, state Medicaid block grants and a transference of regulatory control from federal to state government.

Issue #2: Pharma’s new strategic partner? Patients

  • Facing increasingly challenging reimbursement and regulatory environments, as well as new trends in consumerism, pharmaceutical companies will likely better engage with patients to justify prices, show value and satisfy calls by regulators.

Issue #3: Easing the training wheels off value-based payment

  • To date, new programs and payment models have largely involved upside risk for healthcare providers. But this will begin to change next year as the training wheels for these risk-based arrangements are eased off.

Issue #4: Insert your card here for healthcare

  • Health systems will need to modernize secure payments with low risk and low complexity in preparation for creating more consumer-centered experiences.
    • PwC estimates 5% of healthcare provider revenue today comes through credit card transactions, which will likely double by 2020.
    • According to a recent HRI survey, one in four consumers in poor or fair health stated that their experience with hospital billing and payment damaged their opinions of the organizations.

Issue #5: Paging Dr. Drone: It’s time to prepare for emerging technologies

  • In 2017, the healthcare industry will need to prepare for emerging technologies – such as artificial intelligence, drones, virtual reality and 3D printing – and their impacts on business models, operations, workforce needs and cybersecurity risks.
    • A digitized supply chain could slash manufacturing downtime by 30-40%, boosting equipment effectiveness.[1]

Issue #6: The battle against infectious diseases sparks invention

  • As the war against infectious disease and antimicrobial resistance expands across borders, public health agencies and private industry in the US and Europe are collaborating and investing in the development of new weapons to fight back.

Issue #7: Rx cauliflower: Nutrition moves to population health

  • The drive toward value-based care is prompting established health organizations and new entrants to focus on nutrition as a way to prevent costly medical problems and improve the overall health of the populations they serve. This growing industry awareness of diet as a key driver of healthcare costs for many Americans is fueling creation of inventive programs and collaborations in 2017.
    • Nutritional guidance has also become more common at grocery store chains, as dietitians serve about 11,000 grocery stores nationwide.[2]

Issue #8: Putting the brakes – gently – on drug prices

  • Three years of ongoing pressure on the biopharmaceutical industry’s drug pricing practices may lead to new pricing restrictions led by industry trade organizations and pharmaceutical executives, not regulators.

Issue #9: A year of new partnerships and collaborations

  • The health industry will likely experience continued consolidation through mergers and acquisitions in 2017, with an uptick in alternative transactions, such as joint ventures, partnerships, strategic alliances and clinical affiliations.

Issue #10: Preparing medical students for work in a value-based world

  • As the health industry continues to shift toward value-based care, medical schools and residency programs are building innovative training programs to prepare students for a new healthcare landscape upon their graduation.
    • According to a 2015 HRI survey, physicians believe they will spend more time on activities such as leading teams and coordinating care in the next ten years.

For the full report and graphics illustrating each issue, click here.

[1] Ehrhardt and Behner, “Digitization in pharma: Gaining an edge in operations.”

[2] Greg Trotter, “Dietitian on aisle four: Grocery stores are calling in health experts,” Chicago Tribune, Nov. 10, 2016, http://www.chicagotribune.com/business/ctgrocery-store-dietitians-0501-biz-20160429-story.html.

About PwC’s Health Research Institute (HRI)

PwC’s Health Research Institute (www.pwc.com/hri) provides new intelligence, perspectives, and analysis on trends affecting all health-related industries. The Health Research Institute helps executive decision makers navigate change through primary research and collaborative exchange. Its views are shaped by a network of professionals with executive and day-to-day experience in the health industry. HRI research is independent and not sponsored by businesses, government, or other institutions.

About PwC’s Health Industries Group

PwC’s Health Industries Group (www.pwc.com/us/healthindustries) is a leading advisor to public and private organizations across the health industries, including healthcare providers, pharmaceuticals, health and life sciences, payers, employers, academic institutions and non-health organizations with significant presence in the health market. Follow PwC Health Industries at @PwCHealth.

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

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© 2016 PwC. All rights reserved.

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